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PNB v CA

A corporation is civilly liable in the same manner as natural persons for torts, because "generally
speaking, the rules governing the liability of a principal or master for a tort committed by an agent or
servant are the same whether the principal or master be a natural person or a corporation, and whether
the servant or agent be a natural or artificial person. All of the authorities agree that a principal or master
is liable for every tort which he expressly directs or authorizes, and this is just as true of a corporation as
of a natural person, A corporation is liable, therefore, whenever a tortious act is committed by an officer or
agent under express direction or authority from the stockholders or members acting as a body, or,
generally, from the directors as the governing body." 6

CIR v CLUB FILIPINO

The facts that the capital stock of the respondent Club is divided into shares, does not detract from the
finding of the trial court that it is not engaged in the business of operator of bar and restaurant.

The facts that the capital stock of the respondent Club is divided into shares, does not detract from
the finding of the trial court that it is not engaged in the business of operator of bar and restaurant.
What is determinative of whether or not the Club is engaged in such business is its object or purpose, as
stated in its articles and by-laws. It is a familiar rule that the actual purpose is not controlled by the
corporate form or by the commercial aspect of the business prosecuted, but may be shown by extrinsic
evidence, including the by-laws and the method of operation.

Moreover, for a stock corporation to exist, two requisites must be complied with, to wit: (1) a capital stock
divided into shares and (2) an authority to distribute to the holders of such shares, dividends or allotments
of the surplus profits on the basis of the shares held.

In the case at bar, nowhere in its articles of incorporation or by-laws could be found an authority for the
distribution of its dividends or surplus profits. Strictly speaking, it cannot, therefore, be considered a stock
corporation, within the contemplation of the corporation law.

LIDELL & CO v CIR

It is of course accepted that the mere fact that one or more corporations are owned and controlled by a
single stockholder is not of itself sufficient ground for disregarding separate corporate entities.
Authorities10 support the rule that it is lawful to obtain a corporation charter, even with a single substantial
stockholder, to engage in a specific activity, and such activity may co-exist with other private activities of
the stockholder. If the corporation is a substantial one, conducted lawfully and without fraud on another,
its separate identity is to be respected.

Where a corporation is a dummy, is unreal or a sham and serves no business purpose and is intended
only as a blind, the corporate form may be ignored for the law cannot countenance a form that is bald and
a mischievous fiction."

Where a corporation is a dummy, is unreal or a sham and serves no business purpose and is intended
only as a blind, the corporate form may be ignored for the law cannot countenance a form that is bald and
a mischievous fiction."
GOV OF PH v EL HOGAR

The first cause of action is based upon the alleged illegal holding by the respondent of the title to real
property for a period in excess of five years after the property had been bought in by the respondent at
one of its own foreclosure sales. In both of these provisions it is in substance declared that while
corporations may loan funds upon real estate security and purchase real estate when necessary for the
collection of loans, they shall dispose of real estate so obtained within five years after receiving the title.

A fair interpretation of these provisions would seem to indicate that the date of the receiving of the title in
this case was the date when the respondent received the owner's certificate, or May 7, 1921, for it was
only after that date that the respondent had an unequivocal and unquestionable power to pass a complete
title

In the second cause of action of the complaint it is supposed that the acquisition of this lot, the
construction of the new office building thereon, and the subsequent renting of the same in great part to
third persons, are ultra vires acts on the part of the corporation, and that the proper penalty to be enforced
against it in this action is that of dissolution.

Under subsection 5 of section 13 of the Corporation Law, every corporation has the power to purchase,
hold and lease such real property as the transaction of the lawful business of the corporation may
reasonably and necessarily require. The law expressly declares that corporations may acquire such real
estate as is reasonably necessary to enable them to carry out the purposes for which they were created;
loan association such as the respondent was at the time this property was acquired.

We are furthermore of the opinion that, inasmuch as the lot referred to was lawfully acquired by the
respondent, it is entitled to the full beneficial use thereof. No legitimate principle can discovered which
would deny to one owner the right to enjoy his (or its) property to the same extent that is conceded to any
other owner; and an intention to discriminate between owners in this respect is not lightly to be imputed to
the Legislature

in renting out the unoccupied and unused portions of the building so erected, the association could not
be said to engaged in any other business than that authorized by its charter. The renting of the unused
portions of the building is a mere incident in the conduct of its real business

Under the third cause of action the respondent is charged with engaging in activities foreign to the
purposes for which the corporation was created and not reasonable necessary to its legitimate ends. The
second specification under the third cause of action has reference to the administration and management
of properties belonging to delinquent shareholders of the association.

We see no reason to doubt the validity of the clause giving the association the right to take over the
property which constitutes the security for the delinquent debt and to manage it with a view to the
satisfaction of the obligations due to the debtor than the immediate enforcement of the entire obligation,
and the validity of the clause allowing this course to be taken appears to us to be not open to doubt.

El Hogar Filipino has undertaken the management of some parcels of improved real estate
situated in Manila not under mortgage to it, but owned by shareholders, and has held itself out by
advertisement as prepared to do so.- The practice described in the passage above quoted from the
agreed facts is in our opinion unauthorized by law. The management and administration of the property of
the shareholders of the corporation is not expressly authorized by law, and we are unable to see that,
upon any fair construction of the law, these activities are necessary to the exercise of any of the granted
powers. The corporation, upon the point now under the criticism, has clearly extended itself beyond the
legitimate range of its powers. But it does not result that the dissolution of the corporation is in order, and
it will merely be enjoined from further activities of this sort.

Fourth cause of action. It appears that among the by laws of the association there is an article (No. 10)
which reads as follows:

The board of directors of the association, by the vote of an absolute majority of its members, is
empowered to cancel shares and to return to the owner thereof the balance resulting from the
liquidation thereof whenever, by reason of their conduct, or for any other motive, the continuation
as members of the owners of such shares is not desirable.

This by-law is of course a patent nullity, since it is in direct conflict with the latter part of section
187 of the Corporation Law, which expressly declares that the board of directors shall not have the power
to force the surrender and withdrawal of unmatured stock except in case of liquidation of the corporation
or of forfeiture of the stock for delinquency. It is agreed that this provision of the by-laws has never been
enforced, and in fact no attempt has ever been made by the board of directors to make use of the power
therein conferred. The obnoxious by-law, as it stands, is a mere nullity, and could not be enforced even if
the directors were to attempt to do so. There is no provision of law making it a misdemeanor to
incorporate an invalid provision in the by-laws of a corporation; and if there were such, the hazards
incident to corporate effort would certainly be largely increased.

Fifth cause of action. In section 31 of the Corporation Law it is declared that, "at all elections of
directors there must be present, either in person or by representative authorized to act by written proxy,
the owners of the majority of the subscribed capital stock entitled to vote.

it has been the practice of the directors to fill vacancies in the directorate by choosing suitable persons
from among the stockholders. This custom finds its sanction in article 71 of the by-laws, which reads as
follows:

ART. 71. The directors shall elect from among the shareholders members to fill the vacancies that
may occur in the board of directors until the election at the general meeting

No fault can be imputed to the corporation on account of the failure of the shareholders to attend
the annual meetings; and their non-attendance at such meetings is doubtless to be interpreted in part as
expressing their satisfaction of the way in which things have been conducted

Unless the law or the charter of a corporation expressly provides that an office shall become
vacant at the expiration of the term of office for which the officer was elected, the general rule is to allow
the officer to holdover until his successor is duly qualified. Mere failure of a corporation to elect officers
does not terminate the terms of existing officers nor dissolve the corporation. It result that the practice of
the directorate of filling vacancies by the action of the directors themselves is valid

Sixth cause of action. Under the sixth cause of action it is alleged that the directors of El Hogar Filipino,
instead of serving without pay, or receiving nominal pay or a fixed salary, as the complaint supposes
would be proper, have been receiving large compensation, varying in amount from time to time, out of
the profits of the respondent.

The Corporation Law does not undertake to prescribe the rate of compensation for the directors of
corporations. The power to fixed the compensation they shall receive, if any, is left to the corporation, to
be determined in its by-laws. Pursuant to this authority the compensation for the directors of El Hogar
Filipino has been fixed in section 92 of its by-laws, as already stated.
Seventh cause of action. It appears that the promoter and organizer of El Hogar Filipino was Mr.
Antonio Melian, and in the early stages of the organization of the association the board of directors
authorized the association to make a contract with him with regard to the services him therefor. Stated in
its true simplicity, the primary question here is whether the making of a (possibly) indiscreet contract is a
capital offense in a corporation, a question which answers itself. No possible doubt exists as to the
power of a corporation to contract for services rendered and to be rendered by a promoter in connection
with organizing and maintaining the corporation. It is true that contracts with promoters must be
characterized by good faith; but could it be said with certainty, in the light of facts existing at the time this
contract was made, that the compensation therein provided was excessive? If the amount of the
compensation now appears to be a subject of legitimate criticism, this must be due to the extraordinary
development of the association in recent years.

The majority of the court is of the opinion that our traditional respect for the sanctity of the contract
obligation should prevail over the radical and innovating tendencies which find acceptance with some and
which, if given full rein, would go far to sink legitimate enterprise in the Islands into the pit of populism and
bolshevism. The seventh count is not sustainable.

Eight cause of action - Article 70 of the by-laws in effect requires that persons elected to the board of
directors must be holders of shares of the paid up value of P5,000 which shall be held as security may be
put up in the behalf of any director by some other holder of shares in the amount stated. Article 76 of the
by-laws declares that the directors waive their right as shareholders to receive loans from the association.
Section 21 of the Corporation Law expressly gives the power to the corporation to provide in its by-laws
for the qualifications of directors; and the requirement of security from them for the proper discharge of
the duties of their office, in the manner prescribed in article 70, is highly prudent and in conformity with
good practice. Article 76, prohibiting directors from making loans to themselves, is of course designed to
prevent the possibility of the looting of the corporation by unscrupulous directors. A more discreet
provision to insert in the by-laws of a building and loan association would be hard to imagine.

9th - It follows that the mission of the special shares does not involve any violation of the principle that the
shares must be sold at par.

From what has been said it will be seen that there is express authority, even in the very letter of the law,
for the emission of advance-payment or "special" shares, and the argument that these shares are invalid
is seen to be baseless. In addition to this it is satisfactorily demonstrated in Severino vs. El Hogar Filipino,
supra, that even assuming that the statute has not expressly authorized such shares, yet the association
has implied authority to issue them.

Tenth cause of action. Under this head of the complaint it is alleged that the defendant is pursuing a
policy of depreciating, at the rate of 10 per centum per annum, the value of the real properties acquired by
it at its sales; and it is alleged that this rate is excessive.

There is no positive provision of law prohibiting the association from writing off a reasonable amount for
depreciation on its assets for the purpose of determining its real profits; and article 74 of its by-laws
expressly authorizes the board of directors to determine each year the amount to be written down upon
the expenses of installation and the property of the corporation. There can be no question that the power
to adopt such a by-law is embraced within the power to make by-laws for the administration of the
corporate affairs of the association and for the management of its business, as well as the care, control
and disposition of its property.

11 and 12 - The specification in the eleventh cause of action is that the respondent maintains excessive
reserve funds, and in the twelfth cause of action that the board of directors has settled upon the unlawful
policy of paying a straight annual dividend of 10 per centum, regardless of losses suffered and profits
made by the corporation and in contravention of the requirements of section 188 of the Corporation Law.
It is insisted in the brief of the Attorney-General that the maintenance of reserve funds is unnecessary in
the case of building and loan associations, and at any rate the keeping of reserves is inconsistent with
section 188 of the Corporation Law. Moreover, it is said that the practice of the association in declaring
regularly a 10 per cent dividend is in effect a guaranty by the association of a fixed dividend which is
contrary to the intention of the statute.

Upon careful consideration of the questions involved we find no reason to doubt the right of the
respondent to maintain these reserves. It is true that the corporation law does not expressly grant this
power, but we think it is to be implied.

The question now under consideration is not new in jurisprudence, for the American courts have been
called upon more than once to consider the legality of the maintenance of reserves by institutions of this
or similar character.

From the fact that the statute provides that profits and losses shall be annually apportioned among the
shareholders it is argued that all earnings should be distributed without carrying anything to the reserve.
But it will be noted that it is provided in the same section that the profits and losses shall be determined
by the board of directors: and this means that they shall exercise the usual discretion of good
businessmen in allocating a portion of the annual profits to purposes needful to the welfare of the
association. The law contemplates the distribution of earnings and losses after other legitimate obligations
have been met.

Our conclusion is that the respondent has the power to maintain the reserves criticized in the eleventh
and twelfth counts of the complaint; and at any rate, if it be supposed that the reserves referred to have
become excessive, the remedy is in the hands of the Legislature. It is no proper function of the court to
arrogate to itself the control of administrative matters which have been confided to the discretion of the
board of directors.

13th

There is no statute here expressly declaring that loans may be made by these associations solely for the
purpose of building homes. On the contrary, the building of homes is mentioned in section 171 of the
Corporation Law as only one among several ends which building and loan associations are designed to
promote. Furthermore, section 181 of the Corporation Law expressly authorities the Board of directors of
the association from time to time to fix the premium to be charged. The conclusion of the court was that
the loan was valid and could be lawfully enforced by a nonjudicial foreclosure in conformity with the terms
of the contract between the association and the borrowing member. We now find no reason to depart from
the conclusion reached in that case, and it is unnecessary to repeat what was then said.

14th

The law states no limit with respect to the size of the loans to be made by the association. That matter is
confided to the discretion of the board of directors; and this court cannot arrogate to itself a control over
the discretion of the chosen officials of the company. If it should be thought wise in the future to put a limit
upon the amount of loans to be made to a single person or entity, resort should be had to the Legislature;
it is not a matter amenable to judicial control.

Sixteenth cause of action. This part of the complaint assigns as cause of action that various loans now
outstanding have been made by the respondent to corporations and partnerships, and that these entities
have in some instances subscribed to shares in the respondent for the sole purpose of obtaining such
loans.
At any rate the question whether these loans and the attendant subscriptions were properly made
involves a consideration of the power of the subscribing corporations and partnerships to own the stock
and take the loans; and it is not alleged in the complaint that they were without power in the premises. Of
course the mere motive with which subscriptions are made, whether to qualify the stockholders to take a
loan or for some other reason, is of no moment in determining whether the subscribers were competent to
make the contracts

But in requiring the respondent to sell real estate which it acquires in connection with the collection of its
loans within five years after receiving title to the same, the law does not prescribe that the property must
be sold for cash or that the purchaser shall be a shareholder in the corporation. Such sales can of course
be made upon terms and conditions approved by the parties; and when the association takes a mortgage
to secure the deferred payments, the obligation of the purchaser cannot be fairly described as arising out
of a loan

PALTING V SAN JOSE PETROLEUM

These concepts clarified, is herein respondent SAN JOSE PETROLEUM an American business
enterprise entitled to parity rights in the Philippines? The answer must be in the negative, for the following
reasons:

Firstly It is not owned or controlled directly by citizens of the United States, because it is owned and
controlled by a corporation, the OIL INVESTMENTS, another foreign (Panamanian) corporation.

Secondly Neither can it be said that it is indirectly owned and controlled by American citizens through
the OIL INVESTMENTS, for this latter corporation is in turn owned and controlled, not by citizens of the
United States, but still by two foreign (Venezuelan) corporations, the PANTEPEC OIL COMPANY and
PANCOASTAL PETROLEUM.

Thirdly Although it is claimed that these two last corporations are owned and controlled respectively by
12,373 and 9,979 stockholders residing in the different American states, there is no showing in the
certification furnished by respondent that the stockholders of PANCOASTAL or those of them holding the
controlling stock, are citizens of the United States.

Fourthly Granting that these individual stockholders are American citizens, it is yet necessary to
establish that the different states of which they are citizens, allow Filipino citizens or corporations or
associations owned or controlled by Filipino citizens, to engage in the exploitation, etc. of the natural
resources of these states (see paragraph 3, Article VI of the Laurel-Langley Agreement, supra).
Respondent has presented no proof to this effect.

Fifthly But even if the requirements mentioned in the two immediately preceding paragraphs are
satisfied, nevertheless to hold that the set-up disclosed in this case, with a long chain of intervening
foreign corporations, comes within the purview of the Parity Amendment regarding business enterprises
indirectly owned or controlled by citizens of the United States, is to unduly stretch and strain the language
and intent of the law. For, to what extent must the word "indirectly" be carried? Must we trace the
ownership or control of these various corporations ad infinitum for the purpose of determining whether the
American ownership-control-requirement is satisfied? Add to this the admitted fact that the shares of stock
of the PANTEPEC and PANCOASTAL which are allegedly owned or controlled directly by citizens of the
United States, are traded in the stock exchange in New York, and you have a situation where it becomes
a practical impossibility to determine at any given time, the citizenship of the controlling stock required by
the law. In the circumstances, we have to hold that the respondent SAN JOSE PETROLEUM, as
presently constituted, is not a business enterprise that is authorized to exercise the parity privileges under
the Parity Ordinance, the Laurel-Langley Agreement and the Petroleum Law. Its tie-up with SAN JOSE
OIL is, consequently, illegal.
Section 13 of the Corporation Law, which inhibits a mining corporation from acquiring an interest in
another mining corporation

But this is not all. Some of the provisions of the Articles of Incorporation of respondent SAN JOSE
PETROLEUM are noteworthy; viz:

(1) the directors of the Company need not be shareholders;

(2) that in the meetings of the board of directors, any director may be represented and may vote
through a proxy who also need not be a director or stockholder; and

(3) that no contract or transaction between the corporation and any other association or
partnership will be affected, except in case of fraud, by the fact that any of the directors or officers
of the corporation is interested in, or is a director or officer of, such other association or
partnership, and that no such contract or transaction of the corporation with any other person or
persons, firm, association or partnership shall be affected by the fact that any director or officer of
the corporation is a party to or has an interest in, such contract or transaction, or has in anyway
connected with such other person or persons, firm, association or partnership; and finally, that all
and any of the persons who may become director or officer of the corporation shall be relieved
from all responsibility for which they may otherwise be liable by reason of any contract entered
into with the corporation, whether it be for his benefit or for the benefit of any other person, firm,
association or partnership in which he may be interested.

These provisions are in direct opposition to our corporation law and corporate practices in this country.
These provisions alone would outlaw any corporation locally organized or doing business in this
jurisdiction. Consider the unique and unusual provision that no contract or transaction between the
company and any other association or corporation shall be affected except in case of fraud, by the fact
that any of the directors or officers of the company may be interested in or are directors or officers of such
other association or corporation; and that none of such contracts or transactions of this company with any
person or persons, firms, associations or corporations shall be affected by the fact that any director or
officer of this company is a party to or has an interest in such contract or transaction or has any
connection with such person or persons, firms associations or corporations; and that any and all persons
who may become directors or officers of this company are hereby relieved of all responsibility which they
would otherwise incur by reason of any contract entered into which this company either for their own
benefit, or for the benefit of any person, firm, association or corporation in which they may be interested.

The impact of these provisions upon the traditional judiciary relationship between the directors and the
stockholders of a corporation is too obvious to escape notice by those who are called upon to protect the
interest of investors. The directors and officers of the company can do anything, short of actual fraud, with
the affairs of the corporation even to benefit themselves directly or other persons or entities in which they
are interested, and with immunity because of the advance condonation or relief from responsibility by
reason of such acts. This and the other provision which authorizes the election of non-stockholders as
directors, completely disassociate the stockholders from the government and management of the
business in which they have invested.

J.F Ramirez v Orientalist Co.

Upon this question it must at the outset be premised that Ramon J. Fernandez, as treasurer, had no
independent authority to bind the company by signing its name to the letters in question.
It is declared in section 28 of the Corporation Law that corporate power shall be exercised, and all
corporate business conducted by the board of directors; and this principle is recognized in the by-
laws of the corporation in question which contain a provision declaring that the power to make
contracts shall be vested in the board of directors. . It is true that it is also declared in the same by-
laws that the president shall have the power, and it shall be his duty, to sign contract; but this has
reference rather to the formality of reducing to proper form the contract which are authorized by the
board and is not intended to confer an independent power to make contract binding on the
corporation.

The fact that the power to make corporate contract is thus vested in the board of directors does not
signify that a formal vote of the board must always be taken before contractual liability can be fixed
upon a corporation; for the board can create liability, like an individual, by other means than by a
formal expression of its will.

There were present the four members, including the president, who had already signified their
consent to the making of the contract.

We believe it is a fair inference from the recitals of the minutes of the stockholders meeting of
September 18, and especially from the first paragraph above quoted, that this body was then
cognizant that the officer had already been accepted in the name of the Orientalist Company and
that the films which were then expected to arrive were being imported by virtue of such acceptance.

It will be observed that Ramon J. Fernandez was the particular officer and member of the board of
directors who was most active in the effort to secure the films for the corporation. The negotiations
were conducted by him with the knowledge and consent of other members of the board; and the
contract was made with their prior approval. As appears from the papers in this record, Fernandez
was the person to who keeping was confided the printed stationery bearing the official style of the
corporation, as well as rubber stencil with which the name of the corporation could be signed to
documents bearing its name.

Both upon principle and authority it is clear that the action of the stockholders, whatever its
character, must be ignored. The functions of the stockholders of a corporation are, it must be
remembered, of a limited nature. The theory of a corporation is that the stockholders may have all
the profits but shall turn over the complete management of the enterprise to their representatives
and agents, called directors. Accordingly, there is little for the stockholders to do beyond electing
directors, making by-laws, and exercising certain other special powers defined by-law. In conformity
with this idea it is settled that contract between a corporation and third person must be made by the
director and not by the stockholders. The corporation, in such matters, is represented by the former
and not by the latter.

It results that where a meeting of the stockholders is called for the purpose of passing on the
propriety of making a corporate contract, its resolutions are at most advisory and not in any wise
binding on the board.

it is familiar doctrine that if a corporation knowingly permits one of its officer, or any other agent, to
do acts within the scope of an apparent authority, and thus hold him out to the public as possessing
power to do those acts, the corporation will as against any one who has in good faith dealt with the
corporation through such agent, be estopped from denying his authority; and where it is said "if the
corporation permits" this means the same as "if the thing is permitted by the directing power of the
corporation."
The question here is whether Fernandez is liable jointly with the Orientalists Company as a principal
obligor, or whether his liability is that of a guarantor merely.

.. while Ramirez says that the name was put on the contract for the purpose of guaranteeing, not the
approval of the contract, but its performance. We are convinced that the latter was the real intention
of the contracting parties.

In the judgment of the trial court the Orientalist Company was declared to be a principal debtor and
Ramon J. Fernandez was declared to be liable subsidiarily as guarantor

Nielson Company v Lepanto

We will first take up the question whether the management agreement has been extended as a
result of the supervening war, and after this question shall have been determined in the sense
sustained by appellant, then the discussion of the defense of laches and prescription will follow as a
consequence.

A careful scrutiny of the clause above-quoted will at once reveal that in order that the management
contract may be deemed suspended two events must take place which must be brought in a
satisfactory manner to the attention of defendant within a reasonable time, to wit: (1) the event
constituting the force majeure must be reasonably beyond the control of Nielson, and (2) it must
adversely affect the work of mining and milling the company is called upon to undertake. As long as
these two condition exist the agreement is deem suspended.

It is, therefore, clear from the foregoing that the Lepanto mines were liberated on August 1, 1945, but
because of the period of rehabilitation and reconstruction that had to be made as a result of the
destruction of the mill, power plant and other necessary equipment for its operation it cannot be said
that the suspension of the contract ended on that date. Hence, the contract must still be deemed
suspended during the succeeding years of reconstruction and rehabilitation, and this period can only
be said to have ended on June 26, 1948 when, as reported by the defendant, the company officially
resumed the mining operations of the Lepanto. It should here be stated that this period of
suspension from February, 1942 to June 26, 1948 is the one urged by plaintiff. 5

the next question that needs to be determined is the effect of such suspension. Stated in another
way, the question now to be determined is whether such suspension had the effect of extending the
period of the management contract for the period of said suspension.

Thus, we can see from the above that even in the opinion of Mr. DeWitt himself, who at the time was
the chairman of the Board of Directors of the Lepanto Company, the management contract would
then expire unless the period therein rated is suspended but that, however, he expressed the belief
that the period was extended because of the provision contained therein suspending the effects
thereof should any of the case of force majeure happen like in the present case, and that even if
such provision did not exist the law would have the effect of suspending it on account of the war. . In
substance, Atty. DeWitt expressed the opinion that as a result of the suspension of the mining
operation because of the effects of the war the period of the contract had been extended.
The above claim of Nielson refers to four categories, namely: (1) cash dividends; (2) stock dividends;
(3) depletion reserves; and (4) amount expended on capital investment.

If sufficient shares of stock of Lepanto's are not available to satisfy this judgment, defendant-
appellee shall pay plaintiff-appellant an amount in cash equivalent to the market value of said shares
at the time of default (12 C.J.S., p. 130), that is, all shares of the stock that should have been
delivered to Nielson before the filing of the complaint must be paid at their market value as of the
date of the filing of the complaint; and all shares, if any, that should have been delivered after the
filing of the complaint at the market value of the shares at the time Lepanto disposed of all its
available shares, for it is only then that Lepanto placed itself in condition of not being able to perform
its obligatio

LACHES

1) conduct on the part of the defendant, or of one under whom he claims, giving rise to the
situation of which complaint is made and for which the complaint seeks a remedy; (2) delay
in asserting the complainant's rights, the complainant having had knowledge or notice of the
defendant's conduct and having been afforded an opportunity to institute a suit; (3) lack of
knowledge or notice on the part of the defendant that the complainant would assert the right
on which he bases his suit; and (4) injury or prejudice to the defendant in the event relief is
accorded to the complainant, or the suit is not held barred.

In both agency and lease of services one of the parties binds himself to render some service to the
other party. Agency, however, is distinguished from lease of work or services in that the basis of
agency is representation, while in the lease of work or services the basis is employment. The lessor
of services does not represent his employer, while the agent represents his principal.

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